Mumbai: Worldwide server revenue declined 5.8% in the September quarter of 2016 as compared to the same period last year while shipments declined 2.6% from the third quarter of 2015, a Gartner report said. Hewlett Packard Enterprise (HPE) remained the worldwide leader in server revenue as well as shipments.

Cisco showed an increased revenue in the third quarter, while Huawei and Inspur Electronics saw growth in shipments. HPE, Dell and Lenovo show declines in both server revenue and shipments, the report said.

"The server market was impacted during the third quarter of 2016 by generally conservative spending plans globally. This was compounded by the ability of end users to leverage additional virtual machines on existing x86 servers (without new hardware) to meet their server application needs," said Jeffrey Hewitt, research vice president at Gartner.

"Server providers will need to reinvigorate and improve their value propositions to help end users justify server hardware replacements and growth, if they hope to drive the market back into a positive state," Hewitt added.

Even though HPE saw a decline of 11.8%, it continues to remain the global leader on revenue terms, with a market share of 25.5%. Meanwhile, Dell declined by 7.9% and maintained the second spot with a 17.5% market share, followed by Lenovo with 7.8%. IBM dropped to the fifth position and showed the highest decline at 33% among the top five vendors.

All regions showed a decline in shipments except Eastern Europe, which posted growth of 0.9%. In terms of revenue, all regions except for Japan experienced a decline. Japan grew by 1.3%, the report said.

x86 servers declined 2.3 percent in shipments and 1.6 percent in revenue in the third quarter of 2016. All vendors in the top five except for Cisco experienced a decline in revenue. In x86 server shipments, only Huawei and Inspur Electronics experienced growth.

The report suggests that HPE secured the first position in server shipments in the Q3 of 2016, with 18.3% of the market. Despite a decline of 9.8%, Dell secured the second spot with 16.8% market share. Huawei and Inspur were the only vendors in the top five to increase server shipments in the third quarter of 2016.

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